Wholesome Marketing Ideas, Bite Size

Wholesome marketing ideas, bite size

Sunday, August 7, 2011

Brand portfolios: a mixed bag

There are practically no single-brand companies anymore, and very few stand-alone brands. 

What you have instead are portfolios of brands. Consumer goods companies such as Coca-cola, Kraft Foods, Procter & Gamble, and Unilever each manage collections of hundreds of brands. In financial services, the corporate brand is often supported by dozens of product brands, and in the hospitality and retail sectors multi-banner strategies are common. In the automobile industry too, market segmentation imperatives drive companies to a multi-brand strategy: Volskwagen, Audi, Skoda, SEAT, and Lamborghini are from the same stable; just as BMW, MINI, and Rolls Royce are owned by the same company.

So here’s a question: can a company hold two contradictory brands in its portfolio at the same time? 

And should it?

Consider this ad from Unilever’s Dove brand, targeted at women:
Now consider this ad for Unilever’s Axe brand targeted at young men:

Are the two brands delivering conflicting messages? Is that a problem? What kind of problem?

Obviously, the brands are not targeting the same consumers. 
They are aimed at very different segments, with different needs, tastes, beliefs, and preferences.

Here’s another example: Toyota with its fuel-sipping hybrid Prius:

And the company’s gas guzzling, decidedly environmentally unfriendly Land Cruiser ad:
Companies see themselves as being in the business of serving customer needs. There are many different customer segments out there, with very different needs. 

In the automobile market, there is the environmentally conscious segment that wants to buy a Prius, and then there is the segment that wants the power and roominess of the Land Cruiser. Toyota is simply responding to each segment by designing and delivering products (and brands) that meet their needs, just as Unilever is with Dove and Axe. Should these companies neglect one segment simply because they serve the other?

Isn't market coverage kind of the point of having a portfolio of brands rather than a single brand?

A few years ago, a couple of co-authors and I ran a series of studies to understand how consumers see portfolios of brands.* Our goal was to examine the extent to which beliefs about one brand spillover to other brands in the portfolio. 

I'll spare you the details of the studies (although, if you are interested in the theory and the methodology, you'll find the published paper here).

Anyhow, the results show that, yes, beliefs do spill over, but the extent of spillover depends on how closely the brands are associated in the consumer’s mind.

So if Dove and Axe are not closely related (and I’d bet most consumers do not know they are from the same company), then beliefs about one are unlikely to spill over to the other brand. In other words, the company can continue to speak to each segment independently. On the other hand, when the brands are linked by a common parent brand, such as Toyota for the Prius and Land Cruiser, then consumers cannot help but see the connection.

So companies can connect brands or separate them in the consumers' minds by the brand architecture they use. And separating brands allows companies the possibility of holding "contradictory" brands in the portfolio. 

But remember the old line from Groucho Marx: "Those are my principles...and if you don't like them, I have others."

Just because they can, does not mean companies should have contradictory brand positions in their portfolios. Do consumers expect consistency in the brand portfolios of companies?

How far does this desire for consistency extend? It seems consumers are okay with companies that sell diet cola also selling regular cola. But at some point they may begin to interpret segmentation as hypocrisy. Axe and Dove? But where is that line? Who decides?

Your thoughts?

* Lei, Jill, Niraj Dawar and Jos Lemminck (2008), “Negative Spillover in Brand Portfolios,” Journal of Marketing, Vol 72(3), pp 111-123.


Jay Lebo said...

It seems to me that Unilever has the perfect strategy. If you can have a premium, differentiated product in every category while keeping the umbrella brand essentially a secret, everybody wins.

This also helps demonstrate the lunacy of branding every GM car with a GM badge, as the flagging firm began doing a few years ago. It's probably better if Cadillac owners aren't reminded that their car was made alongside Malibus.

It's interesting to note that the Dove ad doesn't actually condemn the sexy imagery it warns against; it merely encourages parents to talk to their kids about them. Technically, that message isn't in conflict with the Axe ad. That removes any ethical questions about the seemingly incongruous messaging and seals it: Unilever rocks.

Jill said...

While some brands can keep consumers in different segments perfectly happy with different sub-brand messages or identities, other brands may confuse consumers with conflicting messages. This probably depends on a number of factors. For example, are consumers aware of the fact that these sub-brands are from the same umbrella company, the relative dominance of the sub-brands, the nature of the conflicting messages, etc.

In the Unilever's case, I guess few consumers are really aware of the fact that Dove and Axe are from the same company. In the Toyota's case, Prius is just one line of products amongst many other products that Toyota has. Consumer may feel that Toyota's introduction of Prius is just to fulfill the general expectation that we need to be more environmentally friendly. Even the traditionally gas guzzling cars such as Cadillac now have hybrid SUV models.

One thing that I am thinking is that consumers may have issues for a traditionally "socially responsible" company such as Body Shop to introduce a sub-brand with conflicting (and not so socially responsible) messages. In other words, consumers may be ok with a company (e.g., Toyota) "improving" itself by introducing sub-brands with conflicting yet more "socially responsible" messages. However, they may feel betrayed when a traditionally "socially responsible" company (e.g., Body Shop) "downgrades" itself by introducing sub-brands with conflicting and less "socially responsible" messages. This is probably in line with our perceptions towards people around us. We are happy to see improvement on a person, even this means this person will have conflicting behaviors. However, we hate to see a good person doing conflicting and wrong deeds.

Charles said...

What's interesting to me is that Toyota has created new brands in the form of Scion and Lexus - and have clearly differentiated these two brands from Toyota in a whole slew of factors, while somehow managing to keep Toyota's "reliability" image. It would have made a lot of sense to me to do the same with their hyrbid line - though it's difficult to do if you're also introducing hybrid models of your flagships (hybrid camry, for example). It's a real challenge to me - maybe throwing the Land Cruiser in a different company might be the solution. It would be interesting to know how aggressively Toyota is pursuing Land Cruiser sales, though, and how the Land Cruiser is actually perceived in the marketplace - they may be completely unconcerned about the incongruency in their message if they know they only sell Land Cruisers to die-hard Land Cruiser people. I haven't seen a new Land Cruiser in years.

Niraj Dawar said...

@Jay must we rely on the ignorance of the consumer or on keeping the link between Axe and Dove "a secret" to make our portfolio strategy optimal? Is secrecy a good plan or even a possibility in these days of the Naked Corporation (Tapscott and Ticoll)?
@Jill: that is an interesting idea -- that we're not surprised if the company that makes Land Cruiser also makes the Prius (we laud self-improvement),but are upset when we find out the company that makes the Prius also sell the Land Cruiser.
@ Charles: yes, Toyota has created different brands to appeal to different segments in the market -- so why are the Land Cruiser and the Prius under the same umbrella brand? From what I understand, there are plans to roll out several more cars under the Prius brand (will they collectively be known as Prii?) and eventually make it more of a separate brand. But that follows Jay's strategy (above) -- it suggests we separate the brands and hope the consumers don't look under the hood to discover our hypocrisy...

Mike Dover said...

Very nice post. I just promoted it for you on the Wikibrands Facebook page and Twitter account